Consider the following figures: Net Current Assets = $100 Net Fixed Assets = $200 Long Term...

 

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Consider the following figures: Net Current Assets = $100 Net Fixed Assets = $200 Long Term Debt = $150 Equity = $150 Sales $1000 Costs $800 Taxes = $68 Assume that costs and assets increase at the same rate as sales, but debt and equity do not. The tax rate is constant. Also assume that 80% of net income is paid out in dividends, and the firm's fixed assets are being used at 90% capacity. If sales grow by 25%, what is the EFN needed? Consider the following figures: Net Current Assets = $100 Net Fixed Assets = $200 Long Term Debt = $150 Equity = $150 Sales $1000 Costs $800 Taxes = $68 Assume that costs and assets increase at the same rate as sales, but debt and equity do not. The tax rate is constant. Also assume that 80% of net income is paid out in dividends, and the firm's fixed assets are being used at 90% capacity. If sales grow by 25%, what is the EFN needed?

Answer rating: 100% (QA)

First lets calculate the net income before taxes EBTEBT Sales Costs 1000 800 200 Next we need to cal... View the full answer